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Contests with an unknown number of contestants

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  • Johannes Münster

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    Abstract

    This paper studies rent-seeking contests where the contestants do not know the number of actively competing contestants. Two models are compared. In the first, all players are risk neutral; in the second, all have constant absolute risk aversion. If the expected fraction of active contestants is low, an increase in the number of potential contestants increases individual rent-seeking efforts. This effect is in contrast to the complete information case where individual rent-seeking efforts decrease in the number of contestants. The effect is more likely under risk neutrality, but also possible under risk aversion. Equilibrium rent seeking efforts are lower under risk aversion if and only if the expected fraction of active contestants is low. Copyright Springer Science+Business Media, B.V. 2006

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    File URL: http://hdl.handle.net/10.1007/s11127-006-9035-y
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    Bibliographic Info

    Article provided by Springer in its journal Public Choice.

    Volume (Year): 129 (2006)
    Issue (Month): 3 (December)
    Pages: 353-368

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    Handle: RePEc:kap:pubcho:v:129:y:2006:i:3:p:353-368

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    Web page: http://www.springerlink.com/link.asp?id=100332

    Related research

    Keywords: Contest; Rent-seeking; Number uncertainty; Risk aversion;

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